UNITED STATES OF AMERICA

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

OFFICE OF HEARINGS AND APPEALS

In the Matter of:

Fred Conley

Respondent

HUDOHANo. 15-AM-0046-DB-003

HUDOGCNo. 14-0053-DB

March 23, 2016

Appearances:

For Respondent:David A. Domina, Esq.Amelia Prickett, Esq.Domina Law Group, pc HoOmaha, Nebraska

For the Government:

David R. Scruggs, Esq.Washington, D.C.

FINDINGS OF FACT AND RECOMMENDED DECISION

BEFORE: H. Alexander MANUEL, Administrative Judge

Statement of Jurisdiction

On February 24, 2015, the Debarring Official of the U.S. Department of Housing andUrban Development ("HUD" or the "Government") referred this debarment proceeding to theOffice of Hearings and Appeals for fact-finding in accordance with 2 C.F.R. § 180.845(c). TheReferral Order was duly docketed and set for hearing in accordance with 2 C.F.R. § 180.840. Aone-day hearing in this matter was held on June 18, 2015.

The administrative judges of this Office are authorized to serve as hearing officers for thepurpose of issuing findings of fact for consideration by the Debarring Official. 2 C.F.R. §2424.842. These findings of fact are issued after consideration of the entire administrativerecord, including the pleadings, exhibits, sworn testimony, and arguments of counsel.

Procedural History

On July 24, 2014, Respondent FredConley ("Respondent") received a Notice ofProposed Debarment ("Notice") accusing him of failure to disclose apparent conflicts of interestto HUD and to the Omaha HousingAuthority ("OHA"),where he served as a Commissioner.Specifically, HUD alleged that Respondent did not inform HUD or OHAof Respondent's statusas a director of the Collateral Guarantee Fund, Inc. ("CGFI"). He also did not inform eitherHUDor OHA that he occupiedoffice space in a building owned by the Davis Companies. HUDasserts that Respondent's association with CGFI and the DavisCompanies is inappropriatebecause CGFI has a contractual relationship with OHA, and one of the Davis Companies isDavis Insurance Agency ("Davis Insurance"), which is OHA's insurancebroker. Respondent'sconnectionsto with both companies are therefore alleged to constitute "an impermissible conflictof interest" in violation of Section 19(A)(2) of the HUD/OHA Annual Contributions Contract("ACC") and various sections of the Nebraska Housing Act. The Notice seeks to debarRespondent from participation in all procurement and non-procurement transactions with thefederal government for a period often years.

On August 12, 2014, Respondent filed a timely request for a hearing to contest theproposed debarment. HUD referred the matter to this Office for findings of fact on February 24,2015. Respondent maintains that the facts do not support his debarment. Specifically, he assertsthat he was not aware of the lease between CGFI and the OHA, and that OHA and HUD wereaware of Respondent's links to the Davis Companies. As a result, Respondent contends thatneither of the two alleged conflicts of interest actually existed and, if they did exist, wereproperly disclosed.

This Court issued a Notice ofHearing and Order on March 12, 2015 and a hearing washeld on June 18, 2015, pursuant to 24 C.F.R. Part 26, Subpart A. The Government filed its Post-Hearing Brief on August 10, 2015. Respondent filed his Post-Hearing Briefon August 17,2015. The case is now ripe for initial fact-finding.

Applicable Law

A. HUD Debarment Regulations

Pursuant to 2 C.F.R. §§ 180.800(b) and (d), HUD may debar a respondent for:

(b) Violation of the terms of a public agreement or transaction so serious as toaffect the integrity of an agency program such as —

(1) A willful failure to perform in accordance with the terms of one ormore public agreements or transactions;

(2) A history of failure to perform or of unsatisfactory performance ofone or more public agreements or transactions; or

(3) A willful violation of a statutory or regulatory provision orrequirement applicable to a public agreement or transaction;

(d) Any other cause of so serious or compelling a nature that it affects[Respondent's] present responsibility.

The burden rests with HUD to establish the cause for debarment by a preponderance ofthe evidence. 2 C.F.R. § 180.855(a). If met, the burden then shifts to the respondent todemonstrate to the Debarring Official that the respondent is presently responsible and thatdebarment is not necessary. 2 C.F.R. § 180.855(b). Even if a cause for debarment does exist,the Debarring Official is not obligated to impose the requested sanction. Instead, the DebarringOfficial may consider the seriousness of the respondent's acts or omissions and may take intoaccount any of the aggravating or mitigating factors set forth in 2 C.F.R. § 180.860.

The federal government only conducts business with responsible persons. 2 C.F.R.§ 180.125(a). Compliance with this provision serves to protect the public interest by ensuringthe integrity of federal programs. The term "presentlyresponsible," as used in the context ofadministrative sanctions such as the one in this case, is a term of art that encompasses not onlythe ability to perform a contract satisfactorily, but the honesty and integrityof the participant aswell. William D. Muir and Metro Cmtv. Dev. Corp., 00-2 BCA Tl 31.140, HUDBCA No. 97-A-121-D15 (Nov. 6, 1997)(citing 48 Comp. Gen. 769 (1969)). "Present responsibility" is a term ofart that applies to a respondent's conduct with respect to "covered transactions," involving HUDprograms. See, e.g.. 2 C.F.R. § 180.200(a)-(b); 2 C.F.R. § 180.985. Determining "presentresponsibility" requires assessing the risk that the government will be injured in the future bydoing business with a respondent. Benjamin J. Roscoe and Geraldine M. Roscoe, HUDALJ 93-2007-DB (June 26, 1995). Debarment is a serious sanction that should only be utilized for thepurposes of protecting the public interest and may not be used as punishment. 2 C.F.R. §180.125(c). Although the test for determining whether a proposed sanction is warranted is"present responsibility," that determination may be inferred from past acts. Schlesinger v. Gates,249 F.2d 111 (D.C. Cir. 1957); Stanko Packing Co. v. Bergland. 489 F. Supp. 947, 949 (D.D.C.1980).

B. HUD Conflict of Interest Regulations

Title 24 of the Code of Federal Regulations states at Section 982.161 that:

(a) Neither the [Public Housing Authority] nor any of its contractors orsubcontractors may enter into any contract or arrangement in connectionwith the tenant-based programs in which any of the following classes ofpersons has an interest, direct or indirect, during tenure or for one yearthereafter:

(1) Any present or former member or officer of the PHA (except aparticipant commissioner);

(2) Any employee of the PHA, or any contractor, subcontractor, oragent of the PHA, who formulates or who influences decisions withrespect to the programs;

(3) Any public official, member of a governing body, or State or locallegislature, who exercises functions or responsibilities with respect to theprograms, or;

(4) Any member of the Congress of the United States.

(b) Any member of the classes described in paragraph (a) of thissubsection must disclose their interest or prospective interest to the PHAand HUD.

(c) The conflict of interest prohibition under this section may be waivedby the HUD field office for good cause.

C. Applicable Nebraska Law

The Nebraska Housing Agency Act ("NHAA") prohibits state housing officials fromowning or holding an interest in any contract or property or engaging in any business,transaction, or professional or personal activity that would be or appear to be in conflict with theofficial's duties. Neb. Rev. Stat. § 71-1572, et seq. Further, the NHAA provides that if anofficial becomes involved in such activity, he or she must immediately disclose the conflict tothe relevant housing authority's board of commissioners. Specifically, the NHAA states that:

If (1) a housing official becomes involved in any activity, or throughinheritance or other involuntary cause or circumstance, acquires an interestthat violates any provision of Section 71-15,149 to 71-15,157, such housingagency or local government official shall immediately and fully disclose inwriting to the housing agency's board of commissioners the circumstancesthat give rise to the conflict of interest. Neb. Rev. Stat. § 71-15,151.

Findings of Fact

Background

1. OHA is the public housing authority for the City of Omaha, Nebraska, and is authorizedto enter into, execute, and perform contracts. Gov. Ex. 1.

2. In 1996, the OHA, through its Board, entered into an Annual Contributions Contract withHUD, under which HUD provides annual funding to the OHA. Gov. Ex. 2.

3. The ACC requires OHA officers and policymakers to disclose any current or prospectiveconflicts of interest to both the OHA and HUD. The interests may be direct or indirect.Gov. Ex. 2, Section 19.

4. The ACC does not define the term "interest."

5. The NHAA also requires OHA officials to disclose any current or potential conflicts ofinterest to its Board of Commissioners ("Board"). Neb. Rev. Stat. § 71-15,151.

6. OHA's Procurement Policy prohibits its employees, officers, or agents from participatingin the selection or award of a contract when real or apparent conflicts of interest exist.Gov. Ex. 1.

7. Respondent served as a Commissioner on OHA's Boardfrom 2009-2013. Tr. 93:9.

8. Sometime in 2010, Respondent was namedChair of OHA's Procurement Committee. Tr.210:11-15.

9. On March 24,2011, Respondentwas elected Chairmanof the Board by a vote of 5-1. Heremained Chairman until his tenure with the Board ended in 2013. Tr. 144:16-18.

10. Respondent, who holds a law degree from Creighton University, was familiar with theconflict of interest rules in the ACC, the NHAA, and the Procurement Policy. Tr. 88:21-22; 123:6-13; 178:15-179:3.

11. Prior to 2012, Respondent's only e-mail address wasFred.Conley@daviscompanies.com.1 Tr. 118:4-7.

Respondent's Relationship with the Davis Companies

12. Respondent was employed by the Davis Companies as an insurance salesman between1981 and 1985. Tr. 102:16-25.

13. The Davis Companies are owned by Mr. Dick C.E. Davis. Tr. 101:24-25.

14. Respondent and Mr. Davis are former high school classmates and remained friends atleast through the date of the hearing. Tr. 152:4-5.

15. Respondent has maintained office space in buildings owned by the Davis Companiessince approximately 2000. Tr. 190:9-19.

16. Sometime in 2004, Mr. Davis asked Respondent to join CGFI's Board of Directors. Tr.105:15-22. Respondent received no financial compensation associated with this position.

17. CGFI is a non-profit 501(c)(3) corporation, incorporated in the state of Nebraska on May30,2002. Tr. 172:20-23.

18. CGFI has no employees or physical offices. Tr. 112:17-25.

1 An April 2,2010, e-mail from OHA employee Murphy Knight listed Respondent's e-mail address asfconley@daviscompanies.com. During the June 18,2015, hearing, his e-mail address was also occasionallyidentified as FredConley@daviscompanies.com. Neither party has offered definitive evidence of Respondent'sactuale-mail address at the time, though it is undisputed that the addressused the "@daviscompanies.com" domainextension.

19. Respondent was a Director of CGFI from 2004 until its dissolution in 2011. Tr. 105:12-25.

20. Other members of the CGFI Board of Directors have included Lisa Laday-Davis andGeorge Achola. Res. Ex. 8.

21. Mrs. Laday-Davis is Mr. Davis' daughter-in-law, and is also the ChiefExecutive Officerof Davis Insurance. Tr. 103:22-24. Mrs. Laday-Davis was a Directorof CGFI in 2002andwas replaced by Mr. Achola. Res. Ex. 8. Mrs. Laday-Davis served as an Officer ofCGFI from 2002 until the corporation's dissolution in 2011. Res. Ex. 8.

22. Mr. Achola is now OHA's legal counsel. He was a Directorof CGFI from 2002-2004and was replaced by Respondent. Res. Ex. 8.

23. Mr. Davis formed a 501 (c)(3) corporation named the North Omaha FoundationforHuman Development("NOFHD") in 1980and served on its Board of DirectorsasChairman/President until January 1, 2012. Res. Ex. 9.

24. NOFHD is the current fiscal agent for the annual Omaha Blues, Jazz and Gospel Festival.Tr. 118:18-19.

25. Respondent replaced Mr. Davisas BoardChairman/President ofNOFHD on January 1,2012. Tr. 114:6-10.

26. Respondentalso served as NOFHD's ProjectManager for the jazz festival and was on itsProgram, Finance, and Legal/CPA Committees as of January 1, 2012. Tr. 115:5-24.Respondent was not compensated for his work with NOFHD. Tr. 116:19-21.

27. NOFHD leased office space from the Davis Insurance Agency. The lease included acubicle, a desk, an e-mail address, and WiFi and landline telephone access. The lease didnot include a cellular phone. Tr. 145:25.

28. Respondent used the leased space to conduct business on behalf of the jazz festival. Tr.117:24-25.

OHA's Interactions with CGFI

29. On June 15,2010, CGFI signed a lease with OHA to install 11 AM radio towers on theroofs of buildings owned by OHA. Jnt. Ex. 5.

30. The lease was signed by Mr. Davison behalf of CGFI. Jnt. Ex. 5.

31. The lease agreement called for CGFI to pay OHA either $400 or$456 per month2 pertower for two years, with four extensions of either two or five years. The value of the

2Theambiguity in rental payments andterms stems from typographical errors inthe lease itself. The lease reads,"The rental fee shall be paid monthly in advance, and shall be Four Hundred ($456.00) per month/per tower...."Later, the lease agreement reads, "Lessee may have four (4) successive five (2) year options to extend the term ofthe Lease."

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leaseagreement using the lowerof the two indicated rental rates was $105,600 over thetwo-year period.3 Jnt. Ex. 5.

32. On October 14, 2010, then-OHA Procurement Manager Steve Schrader and then-OHAProcurement and Finance Director Timothy Bohling sent an e-mail to OHA ExecutiveDirector Stanley Timm and Mr. Achola expressing concerns about the lease agreement.Gov. Ex. 3. The e-mail noted that Respondent was on the Boards of both OHA andCGFI. It also stated that any contract in excess of $20,000 required approval by the OHABoard, and any contract in excess of $100,000 required approval from HUD and formalsolicitation.

33. Respondent was not included as a recipient of the e-mail. No one who received the e-mail forwarded it to Respondent or spoke to him about it.

OHA's Interactions with the Davis Companies

34. Davis Insurance is an insurance broker that has worked with OHA since approximately1985.

35. On March 2, 2010, OHA issued a Request for Proposals to provide worker'scompensation insurance. Res. Ex. 11.

36. Davis Insurance submitted a worker's compensation insurance proposal on March 16,2010. Res. Ex. 11. Davis Insurance's proposal was selected, and Davis Insuranceeventually brokered the worker's compensation insurance policy between OHA andLiberty Mutual Insurance Co.

37. Davis Insurance submitted another worker's compensation insurance proposal on March18,2011, again in response to a Request for Proposals from OHA. Res. Ex. 24.

38. The Davis Insurance proposal was the only bid received. OHA's Human RelationsDirector opined that the proposal was competitive. Jnt. Ex. 3.

39. During an OHA Board meeting on March 24, 2011, the Board voted unanimously toaccept the Davis Insurance proposal. Jnt. Ex. 3.

40. Respondent, having been named Board Chairman at that meeting, participated in thevote. Jnt. Ex. 3.

OHA's Knowledge of Respondent's Connections to the Davis Companies

41. On November 19, 2009, during an OHA Board meeting, Respondent and Mr. Acholaengaged in a conversation regarding Mr. Achola's concern that Respondent's e-mailaddress constituted a potential conflict of interest. Tr. 96:5-18.

3$400 permonth pertower x 11 towers x 24 months = $105,600.

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42. During the meeting, Respondent stated that he was aware of Nebraska's conflictofinterest rules, and that his association with the Davis Companies did not represent aconflict. Jnt. Ex. 3.

43. Mr. Achola drafted a letter for Respondent to sign, seeking a legal opinion from theNebraska Accountabilityand Disclosure Commission ("NADC") regarding Respondent'spotential conflict of interest.

44. Mr. Achola presented the letter to Respondentduring the November 19, 2009, meeting,but Respondent refused to sign it. Jnt. Ex. 3.

45. Then-Board Chairman William Begley also noted during the meeting that Respondent'se-mail addressed raised a "red flag" because it was associated with Davis Insurance. Jnt.Ex.3.

46. Mr. Achola never independently requested a legal opinion from NADC regardingRespondent's possible conflict of interest.

47. Several days after the meeting, Respondent spoke with NADC Executive Director FrankDaley regarding Mr. Achola's conflict concerns. Tr. 162:14-21.

48. Mr. Daley could not recall whether he told Respondent that his connections with theDavis Companies constituted a conflict of interest. Res. Ex. 16.

49. Respondent did not officially inform anyone at OHA about his connections with theDavis Companies, including his use of office space in a Davis Companies building. Tr.205:17-20.

50. OHA officials were aware in 2009 that Respondent used a @daviscompanies e-maildomain extension.

51. Mr. Achola was aware that Respondent served on the Board of CGFI prior to receivingMr. Schrader and Mr. Bohling's e-mail. Mr. Timm was aware of Respondent's status atleast as of October 14,2010, the date he received the e-mail.

HUD's Knowledge of Respondent's Connections to the Davis Companies

52. In April 2012, HUD sent a six-person team to conduct a comprehensive, on-site review ofOHA. Tr. 44:15-18.

53. Respondent's e-mails to the HUD team were sent from his @daviscompanies e-mailaccount. Tr. 46:6-12.

54. The HUD team discussed Respondent's e-mail address with him and noted that it couldbe a conflict of interest. Tr. 46: 19-23.

55. Sometime around August 2012, Respondent changed his e-mail addressfromFred.Conley@daviscompanies.com to Fred.Conley@NOFHD.org.4 Tr. 100:14-22.

56. Respondent did notofficially inform HUD of hisconnections with the Davis Companies.Tr. 205:10-18.

57. At least one member of HUD's six-person team was aware, in 2012, that Respondentused a @daviscompanies e-mail domain extension.

DISCUSSION

This discussion provides findingsof fact and conclusionsof law necessary to determinethe legal basis for the proposed debarment in this case.5

The Government argues that Respondents' failure to apprise OHA and HUD of hisconnections with the Davis Companies and CGFI violated the conflict of interest rules referred toin the ACC and the NHAA. To counter, Respondent contends that his relationship with theDavis Companies was already known to both agencies. Additionally, he insists that he could nothave disclosed a conflict related to CGFI because he was unaware that OHA had contracted to

lease roof space to CGFI. Respondent also disputes HUD's allegation that he received freeoffice space or other benefits from the Davis Companies.

A. Respondent Violated State and HUD Regulations

The preponderance of the evidence demonstrates that Respondent's long relationshipwith the Davis Companies created a perceived, if not actual, conflict of interest. Respondenttherefore had a duty to disclose the circumstances of that relationship to OHA and to HUD. Hefailed to do so in a complete and forthright manner, as contemplated by the applicableregulations.6 Respondent did not, however, have a duty todisclose his relationship with CGFI.In reaching this determination, the Court has assessed the credibility of both the Government'switnesses and Respondent's own testimony, and has considered the totality of the record in thiscase, including the hearing exhibits, the testimony of the witnesses, the pleadings, and argumentsby Counsel.

4 During the hearing, Respondent also identified the new e-mail address as Fred.Conley@NOFHD.com. It is notimmediately clear which address is correct.

5Suspension and debarment cases typically involve the determination of mixed questions of law and fact. SeeCanales v. Paulson. 2007 WL 2071709 at 5 (D.D.C. 2007) (providing that debarring officials must ensure thatdebarment proceedings are "fair and accurate," and that debarment is warranted under the circumstances. Thedebarring official must consider "'mitigating factors' that are relevant"). See generally. Restatement (Third) ofTorts § 8 (2012) ("[b]ecause this is a matter of the law's evaluation of the legal significance of the actor's conduct,such a question could be characterized as a question of law that should be decided by the court. More precisely, itcan be characterized as a mixed question of law and fact").

6 "If ahousing official becomes involved in any activity, orthrough inheritance orother involuntary cause orcircumstance, acquires an interest that violates any provision of Section 71-15,149 to 71-15,157, such housingagency or local government official shall immediately and fully disclose in writing to the housing agency's board ofcommissioners the circumstances that give rise to the conflict of interest. Neb. Rev. Stat. § 71-15,151. HUD's ownconflict of interest regulation states that any covered individual "must disclose their interest or prospective interestto the [public housing authority] and HUD." 24 C.F.R. § 982.161(b).

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Respondent's Alleged Conflict re: the Davis Companies

There is little question that Respondent had pervasive ties to Mr. Davis and the DavisCompanies. Respondent is a long-time acquaintance of Mr. Davis, going back to theirdays ashigh school classmates. Respondentwas employed by Davis Insurance for four years, sellingproperty casualty insurance. He has maintained office space in Davis Companies' buildings forthe betterpart of two decades, and openly used an e-mail featuring the @daviscompanies domainextension. He has served on the BoardsofCGFI and NOFHD, both companies that were createdby Mr. Davis. In fact, Respondent joined the CGFI Board at the express request of Mr. Davis,and served alongside Mr. Davis' daughter-in-law for much of his tenure there. When he wishedto use CGFI as a fiscal agent for purposesof putting on the annualjazz festival, he turned to Mr.Davis. He also replaced Mr. Davis as Chairman/President ofNOFHD, which he also used as afiscal agent for the jazz festival. Finally, the cubicle rented for his use as an NOFHD volunteeris in a building owned by the Davis Companies. During much of this period, Davis Insurancewas the insurance broker for OHA while Respondent sat on OHA's Board and on itsProcurement Committee. Indeed, one of Respondent's first orders of business after hisascendance to Chairman of OHA's Board was the approval of the worker's compensationcontract brokered by Davis Insurance. Respondent's substantial ties to the Davis Companiescreated legitimate concern for HUD because of Respondent's leadership position on the Board.As chairman of OHA's Board and its Procurement Committee, Respondent was well-positionedto influence OHA decisions for the benefit of Davis Insurance, potentially at the expense ofOHA and its residents.

Davis Insurance worked with OHA for more than a quarter century. The businessrelationship between the two entities would thus have been known to Respondent as soon as heassumed his position on the Board, if not before. Respondent is a law school graduate andacknowledges being well versed in conflict of interest laws. He therefore should haveimmediately recognized the implications of his ties to the Davis Companies.7 Even if thoseimplications were not readily apparent to him at the beginning of his tenure with the Board, theywere made clear during the Board meeting on November 19, 2009. At that meeting, Mr. Acholaspecifically advised Respondent that his @daviscompanies e-mail address could create aperception of conflict. Even after being so advised, he did not change his e-mail address foralmost three years, and declined to seek ethical guidance from the NADC about the potentialconflict.

The Court is therefore convinced that even if there was no direct conflict of interest,Respondent was aware that the perception of such a conflict existed. He was thus obligated todisclose that conflict officially and in writing. The question at issue here is whether he did so.

Respondent admits that he never made an official disclosure to OHA or HUD regardinghis relationshipto the Davis Companies. However, he contends that he made implicitdisclosures to both entities by openly communicating with them via his @daviscompanies e-mailaddress. HUD never directly addressed this "disclosure by way of e-mail address" theory.

7 The Davis Insurance Agency itself recognized the apparent conflict. Its 2011 Workers Compensation InsuranceProposal included a Relationship Disclosure Statement that specifically identified Respondent as "one individual...who might rise to the level of OHA's threshold." However, the statement concluded that Respondent's relationshipwith the Davis Companies had been vetted and found to be appropriate.

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It is undisputed that Respondent regularly e-mailed OHA personnel usingthe@daviscompanies e-mail address as early as 2009. Additionally, the minutes from OHA'sNovember 19,2009, Board meeting proves beyond doubt that the OHA Board knew of thepotential conflictat thattime. HUD was made aware of Respondent's e-mail address in 2012,when he e-mailed members of a HUD task force sent to conduct a review of OHA. The leader ofthe HUD team, Meghan Anderson, testified that she personally received e-mails fromRespondent's @daviscompanies address. She alsostated that, during the review process,members of the OHA staff made her team aware of a potential conflict involving Respondentandthe DavisCompanies. The team discussed the issuewith Respondent, who changed his e-mail address to Fred.Conley@NOFHD.org during or soon after the review.

There is some merit to Respondent's rather novel disclosure argument. Both HUD'srelevant conflict of interest regulation, 24 C.F.R. § 982.161, and the Annual ContributionsContract state that a covered individual is required to disclose any real or prospective interest toHUD and to the housing authority. They do not provide any guidance on what form thedisclosure must take, when it must be made, or to whom it must be made.

Respondent's use of the @daviscompanies e-mail domain extension thus arguablycomplies with the letter of the HUD law, if not its spirit. The presence of the domain extensionis, in and of itself, an open declaration of conflict to anyone who understands its connotations.Both Ms. Anderson and Mr. Achola, for example, quickly recognized it as such after receiving e-mails from Respondent. Individual OHA Board members, then, were clearly aware of theconflict in 2009. There is no evidence that Respondent took any action to conceal the conflict, inderogation of 24 C.F.R. § 982.161.

The NHAA is more specific, ordering that a covered individual must "immediately andfully disclose in writing to the housing authority's board ofcommissioners the circumstancesthat give rise to the conflict of interest." Neb. Rev. Stat. § 71-15,151. Even assumingRespondent's use of his e-mail address constituted an acceptable disclosure pursuant to the HUDregulation, it did not meet the requirements of the NHAA. Respondent never made any writtendisclosure "to the OHA Board." At best, he engaged in e-mail communications with individualOHA personnel, including perhaps members of the Board. But that is not what the NHAArequires. The first indication that the Board itself was made aware of the potential conflict waswhen the matter was raised in the November 19, 2009, meeting. Respondent did not make anywritten disclosure in that meeting; the minutes prove that the discussion was oral only. TheCourt finds no specific document that expressly informed the Board of his e-mail address,8 andtherefore finds that Respondent failed to disclose the conflict of interest per the NHAA.

That is not the end of the analysis, however. Respondent's use of the @daviscompaniese-mail is only one source of his alleged conflict. Respondent also had use of a cubicle in abuilding owned by Davis Insurance. He used that cubicle, and the office supplies associatedwith it, on behalfofNOFHD, a company created by Mr. Davis. An OHA business partner thusprovided Respondent with the means to pursue his private social projects. Although his goals

8 Notably, theNHAA requires immediate disclosure tothe housing authority, but not to HUD. It is therefore of nomoment that Respondent's first e-mail to HUD personnel occurred nearly three years after he joined the Board. Acase could certainly be made that a delay of that length would violate HUD's own regulation. However, HUD hasnot made that argument. It argues instead that Respondent made no disclosure at all.

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were admirable, they created a potential conflict that required disclosure. Respondent neverdisclosed to anyone at HUD or OHA that he made use of Davis Insurance's office space.

Respondent's Alleged Conflict re: CGFI

Both parties agree that Respondent served on the Boards of OHA and CGFIsimultaneously. It does not follow, however, that a conflict of interest immediately arose as aresult. A conflict occurs when there is an incompatibility between one's private interests andone's public or fiduciary duties. Black's Law Dictionary (10th edition, 2014). CGFI's statedpurpose was to promote economic development opportunities for Omaha's minority small-business owners. The record does not show that OHA and CGFI had any business relationshipsprior to or other than the tower lease contract entered into in June of 2010. Consequently, aconflict between the two would not have been reasonably foreseeable. Respondent couldtherefore have pursued both interests without concern. In the present case, his status as a CGFIBoard member became disclosure-worthy only when he became aware ofCGFI's businessrelationship with OHA. Respondent maintains that he had no knowledge of the CGFI-OHAtower lease agreement until he was served with HUD's debarment notice. Accordingly, hecontends, he had no reason to suspect that a disclosure was necessary.

HUD counters that Respondent chaired OHA's Procurement Committee, which handlesthe housing authority's contracts. Moreover, the contract was negotiated by CGFI's Board, ofwhich Respondent was a member. Additionally, HUD claims the contract was unusuallygenerous to CGFI, which indicates that Respondent influenced the negotiations in CGFI's favor.According to HUD, these facts render Respondent's denials not credible.

It is HUD's burden to prove that Respondent knew of a potential conflict. The Courtfinds that it has not done so with respect to the potential CGFI-OHA conflict of interest. HUD'sconclusion that Respondent must have known about the CGFI-OHA contract due to his presenceon the Boards of both entities is at odds with the record evidence. The contract was signed byMr. Timm, OHA's Executive Director. It was not signed by any member of OHA's ProcurementCommittee. Notably, there is no mention of a radio tower lease in any of the ProcurementCommittee's meeting minutes in 2010. The meeting minutes are comprehensive, and includedetailed discussions of OHA expenditures ranging from hiring cleaning services to purchasingnew vehicles. Had the CGFI-OHA contract been brought before the Committee, it almostcertainly would have been discussed, and so would have been recorded in the minutes. Itsomission is therefore revealing.

An e-mail from Mr. Schrader and Mr. Bohling — sent four months after the contract wassigned — is further evidence that the contract did not follow the normal procedural avenues.9The e-mail listed Mr. Schrader's and Mr. Bohling's "concerns" with the contract, including thatit did not have the necessary approval from HUD and the OHA Board. The lack of Boardapproval suggests the Procurement Committee never considered the contract, and so never had

Had Respondent received that e-mail, he would have become obligated at that point to reveal his association withCGFI. However, he was not included in the e-mail, and there is no evidence that it was ever forwarded to him orotherwise discussed with him. There is no indication that Mr. Timm or Mr. Achola took any actions to address theconcerns raised in the e-mail.

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the opportunity to forward it to the full Board. Accordingly, even though the ProcurementCommittee is charged with overseeing OHA's contracts, it appears it did not do so in this case.

Nor is there any evidence that the contract was actually negotiated by CGFI's Board, asHUD contends. The contract was signed by Mr. Davis on behalf of CGFI. He was not amember of CGFI's Board in 2010. No CGFI Board member signed the contract, and no CGFImeeting minutes make any reference to the contract. Indeed, there is no evidence at all directlylinking the contract to the CGFI Board. No witness testified that Respondent was aware of thecontract, either as part of the OHA Board, the CGFI Board, or through some other source. HUDhas therefore not shown that Respondent knew of any conflict. He cannot be debarred for failingto disclose a conflict he did not know existed and could not reasonably have foreseen.

B. Debarment is Warranted

Having found that Respondent did not fully disclose his relationship with the DavisCompanies, the Court must now examine whether this misconduct merits a ten-year debarment.After establishing that a cause for debarment exists, the burden shifts to the respondent todemonstrate "to the satisfaction of the debarring official that [Respondent is] presentlyresponsible and that debarment is not necessary." 2 C.F.R. § 180.855(b). In determiningwhether debarment is an appropriate sanction, "[t]he debarring official bases the decision on allinformation contained in the official record. The record includes ... [a]ny further informationand argument presented in support of, or in opposition to, the proposed debarment." 2 C.F.R.§ 180.845(b)-(b)(l).

Debarment is a serious sanction, and is not to be handed down lightly. It is invoked onlywhen necessary to protect the public interest. 2 C.F.R. § 180.125(c). There are valid grounds todebar Respondent here. Specifically, at all relevant times, he maintained a close business, if notpersonal, relationship with Mr. Davis and the Davis Companies. As a law school graduate andlong-time public servant, Respondent knew or should have known that those relationships poseda conflict of interest with his duties at OHA. Additionally, the record demonstrates thatRespondent failed to accept the import of his conduct over a period of at least threeyears. During his testimony, he remained somewhat intransigent and failed to fully acknowledgethat his legal judgment was simply wrong. Based on the evidence of record, I therefore find thatRespondent is not presently responsible as a contractor with the federal government.

However, the Government has not proffered a substantial basis to support a ten-yeardebarment.,0 Respondent isno longer a member ofOHA's Procurement Committee or itsBoard, though he does remain active elsewhere in Omaha's public affairs. If he is currently arisk to the public interest, HUD has not elaborated on it. It is thus difficult to ascertain how adebarment would benefit the public. Given that there is no significant concern or protectiverationale proffered by the Government, a lengthy debarment would only be for purposes ofpunishment. As such, it is inappropriate. 2 C.F.R. § 180.125(c).

Moreover, even though Respondent was remiss in not disclosing his relationship with theDavis Companies, HUD has not shown that the relationship actually resulted in any harm to

10 Byregulation, a debarment should normally not exceed three years. 2 C.F.R. § 180.865(a). Here, HUD seeks analmost unprecedented ten-year debarment. It offers no explanation why Respondent's alleged misconduct warrantsa debarment period more than three times longer than the standard sanction.

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OHAor its residents. Liberty Mutual was already OHA's worker's compensation insuranceprovider. It therefore was already inthe best position to secure the new contract. Its proposalwasthe onlyone received, and was deemed commercially competitive by OHA's humanresources director. The Board approved the proposal unanimously, with almostno discussion.The minutes of that meeting showthat Respondent did not champion the proposal. Rather, themotion to approve the proposal was raised by Ben Gray and seconded byNell Winford. TheCourt finds no evidencethat Respondent asserted any undue influence to ensure passageof theproposal. The Government insteadrelies on the mere fact of his presence to imply an influence.

Finally, Respondent's failure to disclose his conflict was not the product of recklessnessor disregard for the rules. His nondisclosure was not intended to conceal his actions, and hemade no attempt to deceive anyone at HUD or OHA. To the contrary, it appears Respondentheld a good-faith belief that disclosure was not necessary. His decision may have been ill-advised, but it was not entirely without justification. Respondent testified that he sought theprofessional opinion ofNADC Director Frank Daley, who told him that his connections to theDavis Companies did not constitute a conflict of interest. Mr. Daley stated via affidavit thatRespondent had sought such opinions from him "on several occasions," though he could notstate definitively that they had spoken about the issues in question here. Regardless,Respondent's informal inquiries with Mr. Daley met neither the letter, nor spirit, of the NHAA,which required express written disclosure of the conflict to OHA. Of course, Respondent couldhave avoided any ambiguity by simply signing the letter Mr. Achola drafted, or requesting awritten opinion from Mr. Daley independently. He chose not to do so. Although it is certainlyfair to question Respondent's judgment in this matter, the Court finds no reason why a singlepoor decision should warrant a ten-year debarment.

RECOMMENDED DETERMINATION

The Court finds that HUD has shown by a preponderance of the evidence thatRespondent had a duty to disclose his relationship with the Davis Companies and did not fully doso. It has not shown, however, that he had a duty to disclose his status as a CGFI Board member.HUD has also failed to show that a ten-year debarment is an appropriate sanction. Accordingly,I find that Respondent is not presently responsible. As a result, I recommend that debarment beimposed for a period of one year.

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SO ORDERED.

fttflW*^/H. Alexander Manuel

Administrative Judge